$TSLA puts power up profits

Option traders turned major profits today in downside positions opened in Tesla.

On Apr. 18, Investitute’s tracking systems detected the purchase of 5,000 May 260 puts in one print for $11.25 with shares at $274.31. This was clearly a new position, as its volume from that single trade was well above the strike’s previous open interest of 3,789 contracts.

Those puts traded up to $29.70 this morning, nearly triple their purchase price. The stock fell 15.24% in the same time frame, a large move but nowhere near that of its options on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

TSLA dropped to $232.17 in early trade as an intraday low but pulled back higher throughout the rest of the session to close up 2.69% at $241.47 today. Shares of the electric-car maker have fallen since quarterly earnings results were released after the closing bell on April 24.